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Square Mile MI Report: Growing interest in inflation protection among advisers

Jock Glover, Strategic Relationships Director at Square Mile
  • Concerns over inflation continues to fuel interest in Inflation Protection 
  • IA UK All Companies takes lead as most researched sector 
  • First Sentier most researched group  
  • Baillie Gifford Multi Asset Growth most popular fund 

Concerns over spiralling levels of inflation globally has led to continued interest in Inflation Protection as an investment outcome according to Square Mile’s latest quarterly Market Intelligence Report. While Capital Accumulation was the most searched outcome, with 44.9% of views, Inflation Protection continued to gain ground accounting for 17.4% of all views, up from 14.5% in Q4 2021, with BNY Mellon Long Term Global Equity being the most researched fund offering this investment outcome. Meanwhile, research on Income-oriented funds fell back considerably, dropping from 32.9% to 23.2%.

Released today, Square Mile’s MI Report records the viewing patterns among advisers visiting the Academy of Funds, a depository of insight and opinion on all 334 Square Mile funds rated by the company’s 20-strong team of analysts (as at 31.3.22). In Q1, there were 47,999 unique website visitors and 77,278 page views.

Over Q1, research on Responsible Investment funds accounted for just under a quarter of all views of the Academy of funds, totalling some 10,800 visits. Among these solutions, the Royal London Sustainable World Trust was the most popular, with 12.2% of all views, while the FSSA Greater China Growth, FSSA Asia Focus, Threadneedle UK Social Bond and Liontrust Sustainable Future Managed funds made up the remaining top five. On Square Mile’s Fund Dashboard, there was a significant uptick in interest in the ESG pillar, with views doubling from 21% to 42.6% in Q4 2021 to Q1 2022 respectively.

There were two new entrants within the top three most popular fund groups over the quarter: First Sentier entered in pole position at 7.5%, up 3.1% on Q4 2021, followed by Baillie Gifford at 7.4%. Schroders remained in the top three in third place.

There was also a change in the top viewed IA sectors over Q1, with the IA UK All Companies being the most searched for in our Academy of Funds at 11.4%, pushing the IA Sterling Strategic Bond into second place. Whilst IA UK Equity Income and IA Mixed 20-60% Shares remain popular, their share of views has reduced in Q1 from Q4, landing third (8.7%) and fifth (7.9%), respectively. Equity remained the most viewed asset class with 51.7% of views while there was a continued decline in search for Fixed Income over previous quarters, with a further drop from 27.0% from 23.7% in Q4 to Q1 respectively.

Jock Glover (pictured), Strategic Relationships Director at Square Mile, said, “The global backdrop has created almost the perfect storm for markets, as inflation and interest rates continued to wise, weak supply chains increased demand for goods, along with elevated energy prices and the geopolitical and humanitarian crisis unfolding in Ukraine. Combine that with a savage rotation into large cap value stocks and you have one of the toughest market backdrops we have seen in years. The UK equity market, which had lagged most global peers for some time, bucked the trend by rising slightly over the quarter, albeit with some volatile swings intra quarter. Most other global equity markets were also volatile and ended the quarter down single digit percentage points. Equity market volatility, as measured by the VIX index, more than doubled from 16.7 to 36.6 following the Russian invasion of the Ukraine, before drifting back to less elevated levels as the quarter ended. Meanwhile, yield curves in the West started to flatten as interest rate expectations rose at the short end of the curve driven by inflation expectations and central banks raising interest rates or reducing buyback programmes. Against this backdrop, it is perhaps unsurprising that over the first quarter of the year, we continued to see an increased number of users search for the Inflation Protection outcome on the Academy of Funds.”

Click HERE to view a summary of the Q1 2022 Square Mile Market Intelligence Report.

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